Regis Corp. to sell its interest in Europe's biggest salon chain

Hair-salon giant Regis Corp. Friday took a step to restyle itself, announcing an agreement to sell its stake in Europe's largest salon chain.

The Edina-based company said it will sell Paris-based Provalliance to the Provost family, the majority owners and operators of the business.

Regis said it expects to receive about $105 million in cash, based on current exchange rates with the euro.

Erika Maschmeyer, an analyst at Robert W. Baird in Chicago, said she expects Regis to repurchase shares as part of an ongoing commitment to generate value for shareholders. Regis shares have fallen as low at $12.92 in the last 12 months; the closing price of $17.58 Friday is basically level with a year ago and was up just 6 cents for the day.

The sale, expected to close before Sept. 30, is part of a larger makeover by Regis to eliminate at least half its salon brands to cut costs and simplify its bulky business. The company's North American operations include its premium-priced Regis Salons as well as moderately-priced chains like SuperCuts, MasterCuts and Promenade. Last year the company said it was evaluating the possible sale of its Hair Club for Men and Women.

"While we view recent proactive measures positively, we believe improvement will be gradual and choppy," Maschmeyer said. She noted that in addition to ongoing weakness in consumer spending, Regis must deal with a top-management transition. The company is without a CEO or president and since January has been run by general counsel Eric Bakken, who is serving as interim chief operating officer.

In a statement, Bakken said: "As part of our ongoing evaluation of non-core assets, we are pleased to have reached this agreement to divest our minority ownership interest in Provalliance. We remain focused on enhancing shareholder value through improving the customer experience in our core North American salon operations through simplifying our operating model."

Earlier this week, the company reported lower revenue and same-store sales for its third quarter. Regis is scheduled to report its earnings later this month. On Friday the company said it would record an after-tax, non-cash net impairment charge of $15 million to $18 million in the third quarter related to its investment in Provalliance.